[Upcoming Hydrogen Economy] POSCO Group Aiming for Global No.1, Future Growth Engines Following Steel and Battery Industries

Carbon-Free 'Hydrogen Reduction Steelmaking' and
Investment in Global Hydrogen Supply Chain Establishment and Core Technology Development
Establishing Production System of 500,000 Tons by 2030 and 7 Million Tons by 2050
POSCO Aiming to Become a 'Global Top-Tier' Hydrogen Supplier

Hydrogen is the new growth engine for the POSCO Group. Last year, after 54 years since its founding, the group established a holding company and selected hydrogen as one of the group's seven core businesses alongside steel, battery materials, and lithium. POSCO Group aims to build a global hydrogen supply chain and establish a hydrogen production system reaching 500,000 tons by 2030 and 7 million tons by 2050 through investments in key technologies such as hydrogen reduction steelmaking. Through this, the goal is to become a 'global top-tier hydrogen production company.'

The reason POSCO is pushing hydrogen investment so strongly is that the future of the steel industry also depends on hydrogen. Currently, the blast furnace method used to produce steel inevitably emits carbon. Iron ore is naturally in the form of an oxide, where iron and oxygen are combined. To separate pure iron, it reacts with carbon monoxide (CO) generated by heating coal. This process produces a large amount of greenhouse gases. POSCO is also the company that emits the most carbon in the industry. The average annual greenhouse gas emissions (converted to CO2) from POSCO over the past five years (2017?2021) were 75,821,556 tons. It is no exaggeration to say that the fate of the steel industry in the carbon-neutral era depends on how carbon emissions are reduced. If carbon emissions are not reduced, companies will have to purchase carbon emission permits, which are expected to become more expensive.

A model of POSCO's carbon-zero steel mill is exhibited at the '2021 Hydrogen Mobility+ Show' held at Kintex in Goyang, Gyeonggi Province, in August 2021.
Photo by Jinhyung Kang, Goyang aymsdream@

Hydrogen reduction steelmaking is a method that can drastically reduce carbon emissions during the steelmaking process. This method uses hydrogen instead of coal gas to separate oxygen from iron ore. POSCO plans to introduce a pilot plant for hydrogen reduction steelmaking called 'HyREX' in 2026 to verify its commercial viability. After completing commercial technology development by 2030, POSCO aims to gradually convert the existing blast furnace facilities at the Pohang and Gwangyang steelworks to hydrogen reduction steelmaking by 2050 to achieve '2050 carbon neutrality.'

POSCO's internal businesses, including hydrogen reduction steelmaking and power generation, alone require a massive amount of hydrogen. Of the 7 million tons of hydrogen production target by 2050, POSCO Group's internal demand is expected to be 5 million tons, with 3.7 million tons for hydrogen reduction steelmaking and 1.3 million tons for hydrogen power generation.

Based on stable internal demand, POSCO Group plans to establish an economical hydrogen production and transportation system. The group aims to secure the entire value chain?from hydrogen production to transportation, storage infrastructure, and utilization. This business model is similar to the current battery business, where the entire value chain from mineral mining and processing of lithium and nickel to core material production is secured.

Blue Hydrogen Production Technology Model. Image provided by POSCO Group

First, POSCO currently has the capacity to produce 7,000 tons of 'by-product hydrogen' annually by utilizing by-product gas and natural gas generated during the steel manufacturing process. Starting with by-product hydrogen, which already has production capacity, POSCO plans to expand its hydrogen supply capabilities domestically to the largest scale at every stage?from 'blue hydrogen,' which captures, stores, and utilizes CO2, to ultimately 'green hydrogen,' which emits no CO2 at all.

Green hydrogen is produced by water electrolysis based on renewable energy such as solar and wind power. POSCO Group has begun establishing green hydrogen production systems in strategic countries with excellent renewable energy conditions, such as Australia and Oman. In Oman, a promising site has been tentatively secured with a goal of producing 200,000 tons of green hydrogen by 2030. In Australia, POSCO plans to link the procurement of 'low-carbon steel raw materials (HBI)' with green hydrogen production.

Hydrogen produced overseas is synthesized into ammonia for efficient transportation, shipped by vessel, and stored at hydrogen terminals. Hydrogen in its gaseous state poses an explosion risk, and liquefying it requires cooling to -253˚C. Therefore, for long-distance transportation, it is generally safer and more efficient to transport hydrogen in the form of ammonia, which combines hydrogen and nitrogen. During this transportation and storage process, POSCO will produce steel for hydrogen storage tanks and pipes, POSCO Energy will build hydrogen terminals, and POSCO Engineering & Construction will specialize in hydrogen plant EPC. The ammonia stored at the terminals will be re-extracted into hydrogen and used in various demand sectors such as hydrogen reduction steelmaking, power generation, and hydrogen vehicles. In the future, POSCO will not be just a steel company but a hydrogen steel company.